in the back
Chartered flight
Money laundering, Issue 1459
banknotes.jpg THE depressing tale of corruption at the heart of the South African government is inevitably washing up on British shores, with UK banks having been instrumental in getting money out of the country for businesses owned by the Gupta family close to president Jacob Zuma.

In 2013, usual suspects HSBC and Standard Chartered handled the proceeds of a scam centred on the Vrede project, a publicly funded dairy farm that was meant to provide local employment and bolster black empowerment in the post-apartheid era. Millions of dollars were siphoned through offshore banks and shell companies.

Describing the case last month as the UK parliament debated a money laundering bill, Labour’s Lord (Peter) Hain remarked: “What struck me time and again is why an internationally respected bank such as Standard Chartered would open bank accounts for shell entities registered in a free trade zone such as Ras al-Khaimah [in the UAE], whose primary attraction is as a highly secretive offshore jurisdiction.”

Standard behaviour
What was more remarkable was that the transfers were permitted just a few months after Standard Chartered had been fined $340m by US regulators in December 2012 for money laundering failures and placed under special monitoring.

This was at the same time as HSBC was fined $1.9bn for similar failings. It too has been found handling dubious transfers out of South Africa for Gupta enterprises. It even ignored internal warnings while doing so. “The latter illicit transactions were flagged internally in the bank concerned as suspicious,” said Hain of what he later confided was HSBC’s involvement, “but I am reliably informed that it was told by the UK headquarters to ignore it.”

That money laundering through these banks should still have been taking place after they had been hauled over the coals for it ought to embarrass the HSBC bosses who pledged to put a stop to it, including chief executive Stuart Gulliver and the former head of its audit committee, Baroness (Rona) Fairhead. She went on to sit on the bank’s “financial system vulnerabilities committee”, set up in response to the scandal over which she had presided. She is now the government’s trade minister.

Shifting Sands
The man in charge at Standard Chartered until 2015 as it routed cash through shell companies for the Guptas was Peter Sands. Last month he became head of the Global Fund to Fight Aids, Tuberculosis and Malaria. This was set up 15 years ago as a way to address the lack of public money to take on these scourges in countries most affected, such as South Africa.

That his bank was instrumental in ripping off the South African state doesn’t look good for Sands. The fund has itself been troubled by corruption and allegations of failing to confront the problem (see Eyes passim). It can only be hoped the new banker in charge is a bit hotter on the misuse of money than he was when he was at Standard Chartered.

More top stories in the latest issue:

The demise of Aberystwyth University’s campus in Mauritius, which cost £600,000 and was built to take 2,000 students but attracted just 146.

Four of the companies benefiting from an extra £277m to run the probation service made more than £6m profit from dealing with offenders last year.

The Probation Inspectorate has found “basic offender management was not good enough” at yet another private probation company.

Guidance for police investigating claims of historical child sexual abuse that officers should automatically “believe” the accuser is under review.

Almost half the people claiming employment and support allowance have attempted suicide at some point in their life, according to an NHS survey.

Will the “cell confession” of serial killer Levi Bellfield over the murders of Lin and Megan Russell lead to the quashing of the conviction of Michael Stone?

Despite new evidence, the Criminal Cases Review Commission (CCRC) has refused to send the case of five convicted fishermen back to the appeal court.

The developing scandal at Gentoo Housing, the company responsible for Sunderland’s former council houses.

Beancounter KPMG will face no disciplinary action over its auditing failures in the lead-up to the collapse of HBOS bank a decade ago.

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Next issue on sale: 23rd January 2018.
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23rd January 2018
In This Issue private eye
We do Christmas – Dung Beetle Learning Guide… NHS promise on Vote Leave bus to be fulfilled… Brexit deal opens door to Britain joining EU… The Daily Mail rejoices in royal wedding… Trump declares Moscow capital of the United States… Maduro slams Corbyn… The Christine Keeler I knew, by A. Chair… Social media threatens Nurseryland children… Meghan Markle’s diary, as told to Craig Brown

And also...

- Meghan Markleballs: Fleet Street’s search for royal scoops
- False profits: Is the C of E giving up the Christmas fight?
- Presumed innocent: Changing police guidance in child abuse cases

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Private Eye Issue 1458